The Zer01 Story: Lots Of Buzz, But Is It Actually Real...?

from the evidence-lacking dept

A disruptive mobile phone company claims to have launched on July 1. It's called Zer01, and if on the level, would radically incite price competition in the US cellular market. Zer01 is an MVNO or MVNE (depending on when you spoke with them), and they say that they can offer cheap unlimited service by the 3G GSM cellular data network of a national partner, which they will resell. Voice services would be delivered as data using VoIP. Zer01 launched with unlimited voice, text, and data plans for $79.95 a month - including tethering your laptops all you want, and with no contract. The problem is: there is no evidence that this service actually exists. Nancy Gohring at ComputerWorld digs in to the story, and found a lot of reasons to be suspicious about the company. Added all together, it looks pretty shady, and reminds us of the Gizmondo scandal back in 2005.

But a few people in the comments of Gohring's article said Gohring pulled a hatchet job on a legit young company. They argue that many young companies start out looking rough around the edges. "Where was Microsoft's headquarters when they launched?" Perhaps some young companies do look this sketchy at the onset, but not the hundreds of startups that I've seen and evaluated in my career! And certainly not any company that has a serious shot at taking on the national Tier-1 cellular carriers, head-on. If you want to battle with Verizon Wireless, nationwide, for data, voice, and support services, your business needs to look a far sight more established than a startup with a mailbox in a Vegas strip mall. If you claim patented technologies, devices, a customized On Device Portal, then you should have a team of engineers on staff somewhere, and the USPTO should be aware of your patent. SK Telecom and Earthlink launched an MVNO, Helio, which failed at taking on the big carriers despite the track record of being the #1 carrier in South Korea, and a decent kick off investment of $440M, then $200M more, then $270M more. But OK, let's suspend disbelief just a bit longer: Maybe a small, scrappy company is just shrewd enough to win where others have failed. I want to believe, too. But after interviewing Zer01, I just can't buy into the dream.

I interviewed Zer01 CEO, Ben Piilani at CTIA this year (April Fool's Day). I was lured by their PR release about their plan, which sounded incredible. But after our half-hour interview, my parting words were "Good luck to you, but sign me up as skeptical." During our chat, Piilani said lots of things that struck me, as an experienced telecom analyst, as... um... wrong. Here are just three parts of the interview:

Piilani told how, in delivering wireless data to phones, the wireless part of the connection is the easiest part to handle, and since ZER01 uses its own fiber backhaul network, but only uses the Wireless Carrier for that easy wireless jump, host carriers don't mind the impact because there is ample capacity. I thought, "Wha? That doesn't fit with all the research coming out saying that wireless capacity is being pinched. Nor does it jibe that the carriers just spent $Billions at the spectrum auctions for access to more cellular channels." But then Piilani went on, "You know that in Europe, data is basically free. You can show up in the airport and buy a SIM card, slap it in your phone, and the data is unlimited." Um... I thought, "I was in Europe last month for MWC, and at least once a year for the past 10 years. And as a wireless data analyst, I've bought about 20 of the SIM cards he's talking about. I'm pretty sure I would know if there were an unlimited data, SIM-only option."

As anyone in telecom knows, there is not. I thought to myself: "How odd that he would say such an absolute falsehood. And odder still that he does not know enough about the cellular industry to understand how obviously false he sounds."

I wanted, most of all, to see the proof in the pudding. I wanted to make a call over the company's VoIP over 3G solution. I asked Ben if I could make such a test call, and he said sure, and hooked me up with a Product Manager at the end of our interview. I asked if we could place a call, but the PM began instead by showing me the phone's fancy looking On Device Portal (ODP) UI running on WinMo. He was explaining the great UI and all the apps that were to be included. So I said, "Click on one or two of those nice-looking icons and show me the apps." I picked the icons, and behind every one was an "under construction" response. He picked a couple, and there were some deeper pages. But the ODP was basically window dressing with nothing inside.

So I pushed, and said, "Mr. Piilani sent me over here to make a phone call on your device. Let's call my phone." He replied, "Oh, sorry. Our PR firm told us not to make any calls on the show floor, because the wireless signal here is so unreliable with so many people using it." Odd that Mr. Piilani wasn't aware! I said, "Sure, but the carriers have all put COWS onsite, and no one is having signal problems this year. Look there's one guy talking on his phone right there, and my phone is four bars." He said, "Well, PR told me not to." I thought, "Fail."

I left with serious doubts about Zer01's ability to deliver on their promises, and some suspicion that they might not be on the level. Piilani and his team must have impressed someone, though, because they ended up wining a Best In Show award from Laptop Magazine, and getting praise from some analysts, even while at least a few others were more suspicious. Gohring's much more thorough recent investigation pretty much blows the top off of this story, though. Gohring suggests that Zer01 bears some resemblance to a pyramid scheme, where the real money comes from an ever growing network of distributors or "e-affiliates" who pay money for the right to resell the service. In fact, Zer01 is sold through a network of "e-affiliates" using a Multi-Level Marketing (MLM) setup managed by two other companies, Buzzirk and Global Verge. The Buzzirk cost of entry and compensation schemes incent distributors to join in at $150 the first month, and then $100 monthly thereafter. There are lower join levels, but they don't offer the MLM revenue benefits. For their money, distributors gain the right to a lookalike e-affiliate website that appears... ahem...bushleague, and the right to sell the phones... which haven't actually appeared yet. Zer01 itself claims a network of 50,000 distributors. Assuming that is so, MLM revenues could be over $7M in just the first month -- but that's got nothing to do with actual service revenues.

For an example, check out "Robin and Jerry's" e-affiliate website, replete with photos of the phones they haven't touched yet. The pictures are of standard Windows Mobile devices, and it's interesting to note that the UI shown is either MSFT generic, or the product of (totally legit) German software company Spb Software House. Funny that they're using Spb's images to sell Zer01 instead of actual Zer01/Buzziker screens. Since the phones aren't available, the only thing the MLM websites really sell is a position as a distributor, lower down the food chain.

The MLM world is infamous for its own jargon. Buzzirk is no exception with a "3x9 matrix with vertical and horizontal compression." Most of the distributors defending the scheme at scam.com were saying they would find vindication when the "Triple Diamonds" got the phones. Triple Diamonds are those e-affiliates who have recruited at least 25 active e-affiliates under them, and they are the elites who are expected to get the phones first, and can finally validate whether there is any reality to the story or not. So far, the Triple-Diamonds are only getting delays from Buzzirk and Zer01.

So, is this whole thing legit? Will there be phones? Is it a pyramid scheme, or just MLM?

In the US, a pyramid scheme is illegal, and is defined by an utter lack of product, and a focus on the recruitment of additional distributors instead of product sales. But since Zer01 is a separate legal entity from the MLM distribution companies, they can't be accused of a pyramid scheme -- they simply sell their phones to 'entirely separate companies'... with similar office locations. Meanwhile, Buzzirk and Global Verge, despite recruiting their e-affiliates with a focus on the mobile phone offering, also are clear that they offer other products that their e-affiliates can sell, such as a "water saver," a "power saver," and "identity theft protection." Thus, it is possible that the phones will never arrive, Zer01 will say "Sorry, just couldn't pull it off," and blame it on Ma Bell. Buzzirk and Global Verge can say, "Sorry, e-affiliates, no phones. Thanks for the fees, but stick around to sell the water saver," thus, engaging in legal MLM, not a pyramid. This paragraph is certainly just speculation, but cautious investors might want to investigate further whether the mobile phone service is just an oasis to lure them into an expensive "water saver" MLM franchise.

I've seen all forms of wacky claims made by Zer01 re-sellers while researching this post. I've read how it roams from AT&T, to T-Mobile, to Rogers, to TELUS (with no mention of the fact that TELUS uses CDMA networks not supported by the phones they offer). I've read that it will work in airplanes, that "it's got the 2100MHz speed," that you can download a movie to your laptop in 3 minutes, that it includes SMS MasterCard mobile payment, and that it uses "the proprietary patented technology that Zer01 has that allows your phone to switch from GSM, Tri-Band, Quad-Band, Wi-Fi to connect to the VoIP," that it's 4G, that it's 5G and that it offers 20Gbps on a private FTC-licensed 2100MHz network. The claims range from the improbable to the technologically incoherent or both. The company leaders suggest that this is caused by confusion, and overzealous distributors. Perhaps some clear, correct, and well-presented franchiser information would abrogate the need for the creation of falsities? When so many of the e-affiliates are lying, I think the company at the center still deserves at least some of the blame. Besides, much of the gibberish is right off the Buzzirk franchised website, like "Internet speeds will range across GPRS, EGPRS, EDGE, and even 3G when available." Someone should have told these telecom experts that EGPRS and EDGE are exactly the same thing.

There will surely be Zer01/Buzzirk/Global Verge defenders popping up in the comments, some from the companies, others that just disagree, and some from the 50k "distributors" who have already been convinced to re-sell Zer01. There is a whole army of people out there who, once fooled, have pride, cognitive dissonance, and personal financial interest in defending Zer01. Comment away, call me a hack, and exercise polite free speech. But please also make your case: offer your telecom credentials if you have any, tell us where the Zer01 engineers are, what the special technology is, where the towers are erected for that proprietary 2100MHz network, who the network provider is, how standard HTC phones can push 20 Gbps of data with just a SIM card upgrade, where the claimed patents are, with whom Zer01 has Mobile Network Operator contracts, and if you have used one of the Zer01 devices personally and can vouch that they exist, and work (and aren't just AT&T SIM phones with an ODP).

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Re: Re: FDI Ineternational is the Best Alternative to Bogus Buzzirk

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It may be real, but is it intelligable?

But is it eco-friendly?

The only marketing buzz word that isn't used is "green". Wow! Like Derek, I've spent a couple of hours in the wireless industry, and pretty much nothing adds up for this company. I wish I would have known about them at CTIA, I would have loved to seen their demo as an MVNO, I mean MVNE, or what ever they are today. I did a few minutes of Bing research on Mr. Piilani, any "distributor" should do the same before jumping on this grenade.

Where does the 20Gbps go?

I work in the telecom industry. I should be more specific: I'm a Product Manager for an equipment provider. We sell (among other things) devices for mobile backhaul over fiber.

In the mobile backhaul space, our customers aren't exactly knocking down our door to buy more equipment to feed the towers with TONS of extra wireless bandwidth. They buy new towers and plug them in to the existing fiber networks quite easily. Having a "proprietary fiber" network wouldn't gain them anything, it'd just be a lot of extra trenching.

My expertise lies in the optics side of things. Assume for a moment that the carrier somehow solved an incredible problem and managed to get a WIRELESS SIGNAL (or combination of multiple signals) to push 20gbps, my immediate question is...where does it go? Unless you're going device-to-device with that, I can't imagine connecting that upstream. You're talking literally THOUSANDS of bonded T1s, just for a single customer. The optics cost alone (for the 200 XFP/XFF modules) to feed that would be in the tens of thousands of dollars PER SUBSCRIBER. Routers are just starting to get 10G connections, and even at the industry standard 20:1 oversubscription rate (on ethernet networks), you'd be pushing hundreds of Gbps through each router to serve a moderate user set. That's more than the national fiber backbone typically does. They're certainly not using the multi-million-dollar Juniper/Redback routers to do this...so who?

Even if we assume they really meant 20Mbps, I still can't see a startup having the financial capital to roll out more than a single tower. They don't own the optical networking world end-to-end, so assuming for a moment that they COULD do it wirelessly, they're still looking at hundreds of billions of dollars in optical transport equipment alone to roll out a nation-wide network. And once you've done that, you STILL have to pay for the actual bandwidth.

High-speed wireless data isn't a problem only at the wireless interface. Backhaul, especially in densely populated areas, is still a huge hurdle to overcome. Running tens-of-gigs to a single tower is still not cost effective.

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I worked on both hardware based and software based VoIP products for 7 years. We tested software VoIP clients on WinMo using all kinds of network connections. In my experience cellular networks have high latency, some loss and highly variable bandwidth over time - any one of those problems is enough to ruin a VoIP call. When you add in the jitter buffer required to make the call work at all you end up with lots of latency. Even if they get their product to function the service will be poor. Bad idea.

When I saw this company, I immediately started looking for a competitor in the same space. The closest I could find with a SIM was Nextel's Boost Mobile service, which offers an "unlimited everything" plan for $50 or so a month. However, it's a removable SIM for CDMA/iDen or something crazy, and didn't have GSM. The offering seemed too good to be true, and what you mentioned makes more sense.

Re: Re:

Mike, you should know better. If you spell the name right, they are likely happy. This story is WAY too long to expose a scam, it's a writeup that almost lends some credibility to them. Perhaps they have a deal in place. Perhaps they have found a way to get data access without voice requirement. WHo knows?

If your "expert" wants to expose a scam, he should learn to do it directly, not with a hugely long text that average people won't even read through.

Global Verge

Thanks Derek for all the publicity! We are getting major hits on our website, thanks to you! I have sent the link to your article to the CEO of Global Verge, and will post the reply. Most of your article is terribly wrong, and you need to make sure you get your facts straight before publishing. We welcome any and all questions, and please make sure to tell everyone, that they can contact us at anytime, for more information.

I wish more people knew and had known about YOUR P, Jul 22nd, 2009 @ 9:12pm

Great Story

Im glad I am out! Your story sums it up! Luckily they had thier merchant accounts froze due to all the red flags and were not able to process most credit cards on distributor fees, for now anyway. They almost pulled it off though 30,000 ditributors @ 70bucks = 2.1 million, stall,stall,stall for a few months getting fees in the meantime then when it all falls apart they fall back on the fact they had other products and evade being a pyramid. Its EVIL genius! Your line in the article sums it up best "There is a whole army of people out there who, once fooled, have pride, cognitive dissonance, and personal financial interest in defending Zer01." Theyll keep going even though the writings on the wall even though its BLATENTLY not going to happen. I wish more people knew and had known about YOUR Piilani CTIA interview sooner!!!!! PR says you cant make a call.....WOW! Hope they dont sucker many more. Thanks Again.

Re: Re: Re:

Perhaps anybody stupid enough to think the first paragraph is an endorsement and too lazy to read the rest before investing deserves to get played?

Without the "hugely long text" detailing technical inconsistencies and outlining the author’s reasons for declaring this suspect others may suspect he is being biased, is simply wrong or has a grudge against Zer01; with it, it quickly becomes clear that his justification is sensible, rational and balanced

You seem to state that anyone exposing a scam should do it in words of one syllable and limit themselves to a few sentences - why should the rest of the blog world have to lower themselves to the lowest common denominator as defined by you?

Re: Re: Re: Re:

"You seem to state that anyone exposing a scam should do it in words of one syllable and limit themselves to a few sentences - why should the rest of the blog world have to lower themselves to the lowest common denominator as defined by you?"

No, my point is if you want to protect the masses from a scam, spell it out in simple terms. The first paragraph could have gone a long way to, in simple terms, outline the rest of the article (and why it is a scam). It is basic journalism (and basic writing skills, really). YOu want to get the information to people as quickly as possibly with the least amount of tech up front, and then tech them to death after that.

Re: Re: Re: Re: Re: Re:

Here's the original:

"A disruptive mobile phone company claims to have launched on July 1. It's called Zer01, and if on the level, would radically incite price competition in the US cellular market. Zer01 is an MVNO or MVNE (depending on when you spoke with them), and they say that they can offer cheap unlimited service by the 3G GSM cellular data network of a national partner, which they will resell. Voice services would be delivered as data using VoIP. Zer01 launched with unlimited voice, text, and data plans for $79.95 a month - including tethering your laptops all you want, and with no contract."

Reads like a sales piece.

I don't even need 100 words, let's try a simple start:

A new startup company, Zer01, is coming to market making promises of unlimited data and usage with very low rates. Yet the service they are apparently offering doesn't appear to exist, which indicates that this service may not be entirely on the up and up.

That's just writing off the top of my head, not trying too hard. The point is, within 2 sentences, I have set up both the service and the potential that it isn't possible, rather than running basically a full paragraph sales pitch before even suggesting things aren't right.

Re: Re: Re: Re: Re: Re: Re:

So the problem is that the overview is not right at the beginning of the first paragraph?

It's OK to be vague about the reasons but you have to be vague right at the beginning in case, god forbid, someone can't be bothered reading even the entire first paragraph and bases their decision to invest in a previously unknown company, purely on the strength of half a paragraph on a blog site. Ah the brave new spoon fed world we live in - but OK I can accept that, I guess it goes along hand in hand with the culture of no responsibility which says nothing is ever your own fault, there is always someone else to be sued, it must be someone else fault you didn't read the article

Just don't ask me to like it is all

I do still find it ausing how one man's piece on a blog site is supposed to be some sort of public service broadcast however

Re: Re: Re: Re: Re: Re: Re:

Reading your summary, which you believe should be enough to expose to the scam, I could only conclude that someone doesn't like the company and this is a written hit job on its reputation. Your "summary" is no different than the one many so called financial analysts write when they need to tank a stock. This isn't a court brief, the writers can write whatever the hell they want, if you are too stupid to care to read past first paragraph, that is your problem.

Re: Re: Re: Re: Re: Re: Re: Re:

No, my summary isn't enough to expose the scam - but it is enough to set the tone that there is a scam going on. I don't have to read a full paragraph that reads like it came off the company press release list. The start of the story as I quoted does nothing at all to suggest that this is anything than an up and up company.

Heck, start with "Zer01 is getting tons of press these days, but our investigation and reports on other blogs and sites show that this product is potentially a scam, vaporware of the cellular kind".

If you read that, you would likely read the next paragraph to find out more.

It's about trying to get the "morons in a hurry" to know there is a scam, not a new service someone is praising.

But if the article were shorter or contained less-than-excruciating detail, how effective would it really be in accomplishing its real purpose, namely for Derek Kerton to show you how smart he is and how plugged in he is to the telecom industry? The article wasn't for you; it was for all his potential future clients.

analysts

After years of reading analysts' reports that say things, like telling me to buy Teligent at $90 a share, or MCLD, or eSpire, etc., I realize that the analysts are typically shooting in the dark and have limited information. They want to make a name for themselves and pick a side of the story, and they try to sound smart by repeating a few things they heard and think they understand. The NY Times says Zer01 is real, but Derek questions it because he is not a technician working in the trenches with the data. The person I know who has a Zer01 Pharos 137 is loving it. He is watching TV, making phone calls, getting stock quotes, listening to FM radio, and basically doing everything he wants to. He is amazed at the complexity and he knows which network the data is running on, because he can see it on the phone. Nancy seems to have not asked enough of the right questions and really jumped the gun on this one. I just wish Zer01 was publicly traded because I would be buying up the stock like a crazy man right now. Their stock would have taken a beating the last two days if they were listed. Bummer, because I would remortgage the house to buy shares in their comapny right now. BTW, it is really not appropriate for Derek to refer to the Gizmondo scandel etc. when talking about Piilani. This is a guy who is very charitable and who addresses the United Nations when he comes to New York. His name, reputation and good will are his most important asset

Re: analysts

Do you mind having your close friend making a 1 minute youtube video showing us the sim card thats powering the pharos. Oh and maybe he could pick up some stock of pervasip, while video conferencing, watching a re run, all with High definition voice quality. lol

Re: Re: Re: Re: Re: Re: Re: Re: Re:

Dude,

I have nothing against the way you propose I should have started the story, or your example. What you are pushing for is called the "pyramid" style of writing, used most often by journalists for the very reasons you ascribe: people can get the gist in one paragraph, a little more detail in two, more deep in three, etc. The story can be summarized elsewhere with just the first para, and a hyperlink etc.

But, so sorry to you, this isn't how I chose to write that one. First, this isn't a newspaper, I'm not a journalist. I'm a telecom analyst and consultant. I'm hardly conceding that I'm not a good writer (my mom says I am), I just am not required by my editor, Mike in this case, to follow that pattern. I chose a different narrative style.

"It was the best of times, it was the worst of times." Dickens was a hack. I didn't understand thew whole book from this first sentence.

"The start of the story as I quoted does nothing at all to suggest that this is anything than an up and up company."

OK, now that can only be true if you only read as far as the first half of the first paragraph. The second half reads: "The problem is: there is no evidence that this service actually exists. Nancy Gohring at ComputerWorld digs in to the story, and found a lot of reasons to be suspicious about the company. Added all together, it looks pretty shady, and reminds us of the Gizmondo scandal back in 2005."

If that doesn't send up any red flags to readers, I'm not sure I can help them.

BTW, for those of you arguing my side in this mini-thread, I actually DO want to help people from getting caught up in what might be a scam. That was one of my goals - that they might google this and get some additional information. If I failed at that by somehow writing something that appears as praise, that would be a mistake.

But, oh, yeah, for Anon Coward to be right, you'd also have to IGNORE THE TITLE. Does the title appear to be praise? What 'moron in a hurry' would read the title, and not be able to guess the direction of the whole post?

Something to bear in mind. We often criticize companies, products, services, strategies at Techdirt, but we seldom accuse people of fraud. When you are basically suggesting someone may be a fraud, you had better make sure you can back it up. Better make sure that the claims you make are only ones that are true, and that you don't expose your blog to a reasonable accusation of libel. Thus, I never do come out and say "this is a fraud" even if that is my opinion. I give people the facts that I am aware of, and then my opinion, and they let them decide.

Long story short: write the first paragraph any way you want on your blog.

Re:

What you are saying is exactly why I wanted to try a call with Piilani at CTIA this April. I'm going to agree with you completely as it applies to the present time, and build on what you have written as we move into the near future.

The current cellular networks have too much latency to support good VoIP. I certainly know this well, since I too use voip on the cell networks using Skype and others over 3G.

However, later stages of 3G technology greatly reduce the latency, improving the jitter aspect for voip calls. HSPA, for example, can often support a good voip call. 4G networks will perform even better.

Lots of mistaken people (esp Zer01 distributors) are saying that the cellular networks can't handle the "bandwidth" of voip, and Zer01 has the secret technology to make it work. Hogwash. It's not about bandwidth, it's about latency, lost packets, and whether the packets are received in the proper order (jitter).

Lots of these same people fail to understand that every cell phone sold today uses digital voice, sent in packets. Just not IP-style packets. A cellular voice call uses about 9.6Kbps of data traffic in a dedicated channel, depending on the technology used. Clearly, bandwidth for handling voice packets isn't the issue for a carrier like Verizon, whose 3G network was recently rated at over 900Kbps. Desktop VoIP calls, like Skype, actually use substantially more bandwidth, like 56Kbps or more, but also offer better sound quality (but also lower reliability).

Anyway, voip over cellular is mostly bad quality today, but will get better soon, and will be common in a few years. That single part of the Zer01 story isn't too big a stretch - and we won't need any secret tech from tech and business genius Ben Piilani to achieve it, either.

Re:

Well, in the cellular world, we're seeing more and more "all in" plans at flat rates. Sprint, the most desperate of the big carriers, is pushing the big four to lower prices with $100 All In plans. Boost is doing it too for the youth market. But do you know who owns Boost? Starts with a Spri ends with an nt.

Meanwhile, regional operators like MetroPCS and Cricket are also forcing prices down. Hey, competition is great!

So, Zer01's price (in itself) isn't really a big red flag. However, when I see a low price like that, I want to know how they can make that business work. It's not obvious at all, and many companies have failed trying. Also, no wireless in the world offers unlimited data with tethering at that price, because the data volumes are likely to be huge. If Zer01 needs to pay an underlying network operator for each MB of data, they will go broke. The only way Zer01 can retail unlimited data is if Zer01 has an unlimited deal with their wholesale carrier. This is the clincher. No carrier in this country would agree to wholesale a flat rate data service to an MVNO that will turn around and compete with it. Does that sound like something AT&T would do? For less than $70/mo?

Which is why Piilani and affiliates never give a straight answer as to who the GSM network partner is...because no GSM network operator will do this. This is red flag city. Any MVNO ever can tell you who their network partner is. Amp'd used Verizon, Virgin USA uses Sprint, Boost is on Nextel's iDEN network. And in every one of those cases, the underlying network operator was proud to tell you they provided the network. No secrets. See this example:

Zer01 appears to have struck no deal, and certainly provides no evidence of one. Which explains why Nancy Gohring couldn't find a carrier who had a deal with these guys. If they want credibility, then they should co-release a PR wire with a carrier about a partnership.

Re: Global Verge

Robin and Jerry,

Thanks for the positive energy. I too am a small businessman, and I need to ignore all the rabble out there that keep trying to tell me I can't, or to pull me down.

As you may know, there are people out there that are doers, and people that watch as the parade passes them by. Business executives and company leaders like us know that, with the support of our great teams, we can achieve our wildest goals, and financial independence.

In my pursuit of my American dream, I've had to overcome obstacles, just like you. Of course, my obstacles weren't the laws of physics, and being surrounded by fraudulent partners. The main product of my companies does exist, and in fact existed even before we began selling it! My company wasn't ever run by a convicted felon...but other than than those things, you, Jerry, and I are "Birds of a feather".

I'm glad that I drove "hits on [y]our website". Please let me know how many of those get converted into pigeons..er, I mean "downline affiliates". I mean, what are the odds that they're just dropping by to see an example of a "bush league" crappy e-affiliate site so they can laugh at it?

Hey, about that website: Wouldn't it be cool if Global Verge would actually update it so that it had:
- a way to actually retail a real phone (that actually had some unusually good characteristics)
- correct, complete information
- pictures of Zer01 screens and software instead of HTC, Microsoft, or Spb Software house?
- some kind of customer support for the people who will supposedly someday buy these phones

I know that Global Verge, Buzzirk, and Unified Technologies are now feverishly updating their websites...of course they are mostly trying to remove all the information that Gohring dug up that makes them look shady -- that probably won't help sales too much.

Well, positive energy. Think of success, and may your dreams be as big as your heart. Yes, I'm sure that, in reality, you like me just as much as I like you. Keep working on that uplifting, great team training material, and thanks for providing a great service to the US economy. I think the answer to the current recession ABSOLUTELY is more middle men. Please keep adding them. As long as people are making millions in your downline, they'll be off the unemployment rolls.

Re:

I have repeatedly stated openly that I write here for exposure for my telecom consulting practice. But in fact, that makes me a valuable addition for the readers and a good fit at Techdirt:

- the Techdirt philosophy of "give something away for free to promote your product" is exactly what I'm doing.

- I am incentivized to write smart things that prove to be correct. It doesn't exactly "show how smart I am" if what I write ends up being wrong, does it? Or if I'm just a shill, how smart will I look? So the reader gets rather unbiased expert opinions, that are painstakingly crafted to look smart today, but also to look smart in 2,4, and 6 years in the future. Things that look smart, and stand the test of time - they just might BE smart. Been writing here since 2002 for just this reason.

In actuality, I don't expect ANY of you readers to hire me. Pretty much none of you are in the market for a telecom consultant. I get my work from word of mouth and the network of people I know. But what I often do is, when approaching a prospective client, print a bunch of stories I wrote on their area of activity, to show that I had knowledge of it since 200X, and wrote a few correct predictions. Why do I bother with the comments sections? This doesn't help my business at all. Just for fun, actually. I enjoy a debate.

And as for this article, it is an exception. I did NOT write this to show "how plugged in I am to telecom". ANY real telecom person worth a dime could spot the inconsistencies here. This story took me into the world of MLM, where I an not an expert. This isn't about telecom, it's about an MLM scheme. And the only reason they could trick so many is because THOSE people don't understand the telecom side.

I DID write this post to help people looking at investing their money in this. Scammers deserve to be called out. Since yesterday, I've taken phone calls from Granmas who read the post and wanted me to explain this to them because they were in as distributors. I'd rather not help people one at time, but I have so far. At Techdirt, I often debate pretty rough in the comment areas. I don't mind taking someone down a peg. But I am just trying to do public service on this one.

Re: analysts

"The person I know who has a Zer01 Pharos 137 is loving it. He is watching TV, making phone calls, getting stock quotes, listening to FM radio, and basically doing everything he wants to."

Yawn. Do it all on my standard HTC Fuze phone from AT&T. Did it on my standard HTC Tilt before that. Did it on my Treo 650 before that. Techies like me have been able to do this stuff for years. Since the iPhone, non-geeks have been able to do lots of it, too.

I probably can do a lot of other stuff on my phone that would surprise you, since I have prototype apps from clients, and other neat apps. WHAT ABOUT YOUR FRIEND'S PHAROS MAKES IT A ZER01 EXPERIENCE? Why isn't there a single youtube video? Not even a faked up one?

It's people like you, that don't understand the technology, who can't understand that people like me (that DO understand the technology) know all we need to know about this scheme. Understand?

I'm in the @#$# telecom trenches every day. And people who know half as much as me know twice as much as they need to know to smell something rotten.

I'm sick of these accounts of "my friend had one". Why no proof, why no video? Why does no person with one of these phones ever meet with a real analyst/reporter to show it off and quash the negative reviews?

Ben Piilani, you, anyone. Set me up a meeting in the Bay Area with anybody who has one of these phones. Let me try it with them, let me see some evidence, and then I swear to the lord of all things techie that I'll write up an honest account of the meeting. If I'm dead wrong, I'll come out and say it. I have often written that we need more competition on mobile data services in the US. I want it. But this isn't it.

No network (cellphone company) partnerships (which are essential) to run an MVNO

No customer service staff or announced partnership (for a cellphone company!)

No billing partner announced for his telco service

No deal announced with any handset vendor

Places of business are basically PO Boxes

No logistics partner announced (cellphone carriers need one)

Shows Nokia phone with Ben Kingsley promo, when his service requires Windows OS, which Nokia doesn't support

Claims that he is descendant of former King of Hawaii. I didn't check, that may be true.

Takes pay-to-play per plate fundraiser pictures with VP Dick Cheney, then acts as if he was awarded the "2008 Congressional Medal of Distinction" for merit. All you have to do to get this "award" is pay and go to dinner. These "awards" are a scam done by both political parties, too! For a few bucks, they offer credibility tools for grifters.

Claims Board roles in orgs where he is NOT EVEN a member, like the National Energy Marketers Association and the United Nations Global Pact.

Piilani does appear to have sponsored two UN Global Compact meetings. He is identified by the organization as "Event Sponsor, Ben Piilani". ie: he's not on the Board, but he did buy them lunch. In return, he was allowed to address the group for a few minutes before lunch.

At the National Association of Energy Marketers (NEMA), Piilani is not on the Board as claimed. How is he connected to them? Well, at a conference they had in March 2004, he was a speaker on a panel about Advanced Energy and Power Line Technologies. That's all. A one-time panelist. But the NEMA newsletter published the following day tells us how he also demonstrated "a BPL system using a wireless router plugged into the hotel's power system. The connection was fast - 10 meg/sec - and helped some conference attendees get their email." OK, for those who aren't "technicians working in the field" Broadband Over Powerlines (BPL) is not at all the same as Homeplug (http://www.homeplug.org) Homeplug, which Piilani probably demonstrated is for in-building LOCAL network sharing, BPL is for wide area network operations. Aside from the fact that BPL doesn't work well, Piilani managed to dupe some NEMA marketers into thinking Homeplug was BPL! And as the CEO of a billion dollar company, aren't all your demos done in the lobby of a hotel during lunch at a conference?

Claims to be "in extremely high demand as an expert executive speaker" in the telecom industry...but only ever spoke at three conferences (he lists them all), all 3 this year. He was on the agendas because people took him at face value and thought Zer01 sounded interesting.

Claims his parent company, Unified Technologies Group (UTG)has 18 subsidiary companies. No offices, though, and no evidence of any of the subsidiaries. They do have a bush league website that changes every time Nancy Gohring points out dubious data in it.

The picture on the Unified Technologies website shows an impressive corporate building. An appropriate HQ for a big operation like UTG. Too bad UTG isn't IN that building, but is basically located in PO Box.

UTG claims to "work with corporations, organizations, institutions and government entities". Who? Can we talk to them?

Website claims ongoing activity in: "Broadband Technology,
Electronic Transmission, Energy, Entertainment, Financial, Services, Manufacturing, Mobile Wireless, Multi-media, Smart Power and Electric Grids, Smartphone Technologies, Telecommunications, and Wireless Technology". Um...is that just the brilliant Ben Piilani? Can't be just him, or he would be quite overworked. Wouldn't a business like that have a facility, engineers, support staff, etc?

Nope, Sam, you're a classic case of cognitive dissonance. Piilani has a lame reputation, and what he has he has artificially constructed. A facade like that would be spotted by all but the most gullible marks.

Look at the data. Is it really not appropriate to refer to the extremely similar Gizmondo scandal, where a bunch of con-men hyped up a fictional mobile device, got a bunch of investors to front them money, and then spent the money on themselves? There's a long list of bullets above (which took just 1 hour to dig up) which says the Gizmondo reference is warranted.

So, am I an "analyst typically shooting in the dark and have limited information", or are you just a grade-A rube? It's one or the other.

There was a saying once...*something* and his money are soon parted...whatever, it'll come to me later.

I'm amazed that people might think and even complain that the first paragraph makes it sound like it's about to support the product, when the language is couched in conditionals and subjunctives

X claims that Y. If true, this would also mean Z.

As a simple exercise in logic, nobody should reasonably say that this statement proves either or both of Y or Z.

Then if it goes on to say that Z is virtually impossible to be true, and this might cast doubts on the probability of Y, and on the veracity of X.

... the only conclusion I can reach is that some people don't understand the language.
_

Talking of language, Ben Piilani claims relationships with various name-dropped companies, even in Europe and elsewhere.

I could do the same. I've sat in a Boeing (one) aircraft operated by Ryanair (two) flying to Germany (three) to see a trade show, and walked around the stands with friends and spoken to quite a few companies of various sizes. I even kept a couple of the leaflets. One friend introduced two standholders to each other, and subsequently bought one of the products to use the other.

Come to think of it, even phoning up a company to enquire about a certain product, but never buying it, could at a pinch be counted as a relationship.

So can buying a seat at a dinner, and having your photo taken with someone who appears bored enough not to have even the slightest clue who you are. Step forward Dick Cheney, to tell us who Ben Piilani is.

Thanks Man

Derek,

Just wanted to thank you for confirming all the research I had been conducting on my own. It's amazing the truth is overlooked so often but thanks to people like yourself and Nancy et al perhaps this can finally be exposed for what it is.

Re: Thanks Man

Your welcome. Hope I help some people keep their money.

On a point of order, though. If you're going to re-post an hour of my work on another site, in its entirety, verbatim, please be sure to reference where you found it clearly, and provide a link to the original.

We're definitely not the copyright police here at Techdirt, and copying our stuff is fine. But we do prefer when people give us attribution.

Re: Re: analysts

I am posting anonymously because this subject is a sore subject within my wife's family.

Ben is a very smart man. that’s the only good i have to say about him.

But intelligence and sense do not always go hand in hand.

According to some He ran his father’s successful print shop into the ground .

He’s had a few other businesses, but they must not have been very successful as Ben, his wife and kid have lived with his parents for many years as they couldn’t afford their own place. While this in itself is not unusual the following is very indicative of the kind of person he is.

While he’s was off pursuing internet over powerlines and other pie in the sky ventures, his wife was asking family members for money to buy diapers and food.

During this time family that wanted to talk to her couldn’t even leave a message as the people living in the house wouldn’t leave a message.

This is particularly disturbing as Ben ran a cell phone store at the time and his wife didn’t even have one.

Things seemed to settle down after the second child came along but

They currently live in a house supposedly leased from one of the “companies” he controls. No one really knows the details, but something tells me this won’t last long either.

When zer01 was first mentioned to me by his brother-in-law I was very curious and excited as it was something I was truly interested in.

However when digging for information I couldn’t find anything substantial.

I was told that nothing will really be available till june09.

So I waited. And as everyone following this story has found out. Its probably all smoke and mirrors.

For his wife’s sake I wish him success and hope this zer01 thing is real. But I truly doubt it.

Comments from FDI people

I haven't been able to find anyone picking apart FDI and their offering. If $30/mo unlimited everything (on my blackberry without having to change my number) is real, sign me up! I'd like to see some of the more knowledgeable people here target FDI and the chatter coming from them the last few weeks. Thanks in advance!

Not finding anything awful on FDI..

I spoke today with Steve Schultz and have confirmed more information with the Master Distributor (Dale Johnson) at FDI. The Telecom announcements being made in 2 weeks are very marketable, especially in an economy like this.

The US being the 63rd (maybe 62nd?) country that this telecom company is launching in makes me feel good - phones and service has been in use over here for years, just not yet in the states.

Global Verge vs FDI (as I see it)

GV = tons of negative press and lots of unanswered questions and a history of misinformation (trying to be nice)

FDI = can't find any dirt

GV = $79.95/mo for unlimited cell service

FDI = $30/mo for unlimited cell service

What would my mom and brother and friends choose? Hmm

Very open to new information - please email me any pertinent info and I'll repost as necessary. newdad27@gmail.com

FDI International

Derek:

I am watching FDI and they are launching 8/15 with phones and service in the U.S. and have been established (through their new telecom partner) overseas for over 6 years with millions of customers. Can you please do some research and give this company a grade on what they are promising and promoting.

Latest Global Verge News!

Will Your Neighbor’s Be Your Cell Phone Provider, Or Will You Be His?

That’s the plan of Buzzirk Mobile, powered by Zer01, is to capture a large portion of the worldwide cellular market with its veritable mobile convergence technology. The proprietary patent pending technology allows Windows Mobile 6 Smart phones to go from cell to tower to the internet there by skipping over the wireless network. The CEO Ben Piilani has contracted with VOX, a division of Pervasip to provide the VOIP and Carrier network for Zer01. Zer01 has agreements with other cellular carriers for the cell tower uplinks.

It’s not a question of if, but when. That’s what 50,000 Global Verge E-Associates want to know. The announcement on May 7th, 2009, that Global Verge and its subsidiary MVNO Buzzirk Mobile had secured exclusive MLM rights, created quite a stir. The excitement grew to frenzy, and had to be curtailed by the companies. At the height of the hoopla, more than 1,500 E-Associates were signing up everyday. This created several problems the company was not staffed to handle. Credit card processing and back office issues lead to Buzzirk and Zer01 missing their initial launch date of July 1st. Working feverishly to correct the problems, a new COO was hired and the office is being staffed to handle all the new E-Associates. Pay checks are being sent out and the phones are coming soon. The Diamond Leaders, as they are called, will have their phones sometime in August. Company officials have said that their main mission is to get all the Global Verge Associates that want a phone to have a phone, before it goes retail to the public.

Zer01 in a press release said it was looking at several big box Retailers to also market their unlimited plan. If Global Verge and its Associates take off again when the phones are released, big box Retailers may find themselves, waiting in line until the projected 1 million Global Verge Reps get their phones.

What’s all the excitement about? Two things: unlimited cell phone with a fixed rate of $79.95; plus free internet, text, data, uploads and downloads at Broadband speeds. The only glitch is it will only be available on GSM networks. Verizon and Sprint are using a different technology, so you will not be able to unlock and use these phones on the Zer01 program. Pharos, HTC and Ericsson are making the unlocked phones now. Once the phone system is up and going, and demand from the Global Verge Reps have been met, other manufacturers are expected to come on board. Making SIM cards for over 4,000 different kinds of phones is nearly impossible for an upstart like Zer01.

Once in a great while, a product or idea comes along that literally changes the way we operate forever. Buzzirk and Global Verge recognized this new technology and jumped on the opportunity to become its marketer. The Global Verge 3x9 matrix allows the Global Verge Associates to maximize income through their compensation plan: both through recruiting new E-Associates and retailing this revolutionary cell phone plan. Once the phones are released to the Global Verge E-Associates, the race will be on! Piilani says there is a market potential for 30 million subscribers and it will take 5 years. Global Verge expects 1 million distributors in less than 2 years. The people becoming associates right now are setting themselves up for windfall profits. With the economy like it is, and the cost of other cell phone plans, the Global Verge E-Associates may be at the right place at the right time!

Latest Global Verge News!

Will Your Neighbor’s Be Your Cell Phone Provider, Or Will You Be His?

That’s the plan of Buzzirk Mobile, powered by Zer01, is to capture a large portion of the worldwide cellular market with its veritable mobile convergence technology. The proprietary patent pending technology allows Windows Mobile 6 Smart phones to go from cell to tower to the internet there by skipping over the wireless network. The CEO Ben Piilani has contracted with VOX, a division of Pervasip to provide the VOIP and Carrier network for Zer01. Zer01 has agreements with other cellular carriers for the cell tower uplinks.

It’s not a question of if, but when. That’s what 50,000 Global Verge E-Associates want to know. The announcement on May 7th, 2009, that Global Verge and its subsidiary MVNO Buzzirk Mobile had secured exclusive MLM rights, created quite a stir. The excitement grew to frenzy, and had to be curtailed by the companies. At the height of the hoopla, more than 1,500 E-Associates were signing up everyday. This created several problems the company was not staffed to handle. Credit card processing and back office issues lead to Buzzirk and Zer01 missing their initial launch date of July 1st. Working feverishly to correct the problems, a new COO was hired and the office is being staffed to handle all the new E-Associates. Pay checks are being sent out and the phones are coming soon. The Diamond Leaders, as they are called, will have their phones sometime in August. Company officials have said that their main mission is to get all the Global Verge Associates that want a phone to have a phone, before it goes retail to the public.

Zer01 in a press release said it was looking at several big box Retailers to also market their unlimited plan. If Global Verge and its Associates take off again when the phones are released, big box Retailers may find themselves, waiting in line until the projected 1 million Global Verge Reps get their phones.

What’s all the excitement about? Two things: unlimited cell phone with a fixed rate of $79.95; plus free internet, text, data, uploads and downloads at Broadband speeds. The only glitch is it will only be available on GSM networks. Verizon and Sprint are using a different technology, so you will not be able to unlock and use these phones on the Zer01 program. Pharos, HTC and Ericsson are making the unlocked phones now. Once the phone system is up and going, and demand from the Global Verge Reps have been met, other manufacturers are expected to come on board. Making SIM cards for over 4,000 different kinds of phones is nearly impossible for an upstart like Zer01.

Once in a great while, a product or idea comes along that literally changes the way we operate forever. Buzzirk and Global Verge recognized this new technology and jumped on the opportunity to become its marketer. The Global Verge 3x9 matrix allows the Global Verge Associates to maximize income through their compensation plan: both through recruiting new E-Associates and retailing this revolutionary cell phone plan. Once the phones are released to the Global Verge E-Associates, the race will be on! Piilani says there is a market potential for 30 million subscribers and it will take 5 years. Global Verge expects 1 million distributors in less than 2 years. The people becoming associates right now are setting themselves up for windfall profits. With the economy like it is, and the cost of other cell phone plans, the Global Verge E-Associates may be at the right place at the right time!

Re: analysts

The person I know who has a Zer01 Pharos 137 is loving it. He is watching TV, making phone calls, getting stock quotes, listening to FM radio, and basically doing everything he wants to. He is amazed at the complexity and he knows which network the data is running on, because he can see it on the phone.

I was doing ALL of these things at least four years ago, perhaps even longer, with my T-Mobile MDA. Friends of mine would pass the phone around at parties, because nobody had ever seen anything like it before. This isn't new technology you've discovered.

Re: Latest Global Verge News!

Re: Comments from FDI people

A reasonable request, but not our mission at Techdirt, and not mine personally. I haven't got the time or the stomach to dig into every potential MLM scam relating to telecom.

This one came across my radar because of what Zer01 claimed, and how it would be very significant to the industry if true. I didn't want to miss out on a huge disruptive force, so I gave it an honest evaluation.

I walked away very skeptical of Zer01's ability to deliver, but I had no idea at the time of CTIA that they planned to scam people using MLM.

I have avoided getting distracted by FDI (as much of the research done here overlaps with them) because I also have to do my regular work to earn my living.

That's a phrase that has been resounding in pyramid marketing for decades. Only two kinds of people use it in this situation: People knowingly trying to make money off a scam and are lying, or people who have fallen for a nice brainwashing and actually (religiously?) cling to the belief that they aren't suckers who have been completely taken. I have nothing but scorn for the former, and deepest pity for the latter.

Just a brief search through the Internets should be plenty of answer for anyone actually curious about this scam. And yes, I will call it a scam until someone proves me wrong. So far, no one has. Deadline after deadline has passed, and they keep passing. No working phones on this phantom network. No network. No telco partners. No infrastructure. Nothing. Just a lot of wild-eyed fanatics shrilly shouting out "WAIT AND SEE! WAIT AND SEE!" I half expect them to add "THE RAPTURE IS COMING!"

Do you drink Kool-Aid? You may want to only use the stuff you mix up personally.

Listen people. Everyone gets fooled. It's not a crime to be taken advantage of. It IS a crime to spread the cheer and get your friends and associates taken along with you. That's called 'fraud'. So if you are just a sucker, admit it, learn your expensive lesson and move on. But if you keep blathering on about it, trying to pump the value of the valueless, you are no longer a victim. You are a scammer. You've been told to wake up countless times. We've waited. We've seen nothing...again and again. That's what you paid for. That's what you are waiting on. And no matter what brainwashing they fed you about "There will be many doubters! Don't lose faith!" you were suckered, and you continue to line the pockets of con-men. They will do anything to keep the scam alive for every possible second, because every second makes THEM a mint, while more and more victims/suckers are baited and landed.

If you want to believe, fine. Just stop trying to find new suckers to convince. The only one you are fooling is you.

Either way, we all WILL see very soon. It's a safe bet that more than a few law enforcement agencies have now taken note. Unfortunately for some, I don't think it will be the doubters with the regrets.

That sounds unfortunate

What a raw deal for the people who got involved. We are a wireless service that is already up and running.
Let your hook be always cast. In the pool where you least expect it, will be fish.
Ovid
800-293-3117
http://livenow.mywirelessrep.com/tour.html